Samsung Electronics to break from smartphone business, what to be the next-generation growth power?
Samsung Electronics’ movement to lower its dependence on smartphone business will begin full scale next year. It is analyzed that the conservative smartphone sales goal set for next year is its strategy to stably maintain profitability by avoiding excessive price competition. This is a strategic move to maintain the premium position as Samsung Electronics’ brand value increased and it has secured an unrivaled No. 1 position in the smartphone market.
As a post smartphone business, the focus will be placed on smartphone derivatives in the short term, such as peripherals and accessories. The cumulative smartphone sales over the last seven years are 2.89 billion phones. Smartphone demand has slowed down, but the demand for accessories including batteries and covers continues to increase. The peripherals market, such as Galaxy Gear, is also showing potentials to an extent.
“Galaxy Gear sales have been slow. However, Galaxy Gear 2, which is released together with Galaxy S5, will be different,” said an industry insider. “The fashion-related functions in addition to hardware and software functions have been more strengthened.”
The significant increase of network equipments demand in line with a rapid increase in mobile data traffic also provides an opportunity to Samsung Electronics. The monthly average global Internet traffic volume this year is as high as 55.5EB. This has increased by 27.5% from last year. As IoT expanded following the expansion of smartphone market, the monthly average Internet data traffic volume in 2017 is forecast to be 120.6EB.
As part of this effort, Samsung Electronics is further accelerating entry into communications equipments market. As an example, it has promoted V.P Kim Yeong-gi to president at the recent executive personnel appointment, and strengthened his role. Since the establishment of Samsung Network R&D Center in Shenzhen, China earlier this year, Samsung Electronics’ overseas market entry has been more aggressive. Based on the R&D Center in Shenzhen, Samsung Electronics plans to enter the advanced markets in Europe and the U.S. by combining R&D, production and sales functions. Samsung Electronics is dispatching top-level personnel to the R&D center in order to set the wheels moving in a short period of time. From Network Business Division, excellent human resources ranked as class S for two years or more were sent to the Shenzhen R&D Center.
Samsung Electronics will also foster data center and cloud computing-related businesses to process and save the rapidly increasing data. While the focus had been placed on hardware products relating to memory semiconductors and server data centers, Samsung Electronics set up a goal to create high added values by selling the system as well. The recent appointment of President Jeon Dong-su who developed his career in Samsung Electronics’ Memory Business Division as the CEO of Samsung SDS is also analyzed as the company’s strategy to foster system and service business.
In the long-run, Samsung Group will develop high-tech materials business in an attempt to seek for synergy with Samsung Electronics. Samsung Display recently became the largest shareholder of Corning, a glass materials maker, and Cheil Industries branched off its fashion business sector and took over Germany’s Nova LED.
“We are ready to use all methods considering M&A if there are businesses that can be used as our new growth power,” said a high-ranking officer from Samsung. “We will not settle for our current achievements even if our businesses (including smartphone business) are producing satisfactory outcomes.”
As a post smartphone business, the focus will be placed on smartphone derivatives in the short term, such as peripherals and accessories. The cumulative smartphone sales over the last seven years are 2.89 billion phones. Smartphone demand has slowed down, but the demand for accessories including batteries and covers continues to increase. The peripherals market, such as Galaxy Gear, is also showing potentials to an extent.
“Galaxy Gear sales have been slow. However, Galaxy Gear 2, which is released together with Galaxy S5, will be different,” said an industry insider. “The fashion-related functions in addition to hardware and software functions have been more strengthened.”
The significant increase of network equipments demand in line with a rapid increase in mobile data traffic also provides an opportunity to Samsung Electronics. The monthly average global Internet traffic volume this year is as high as 55.5EB. This has increased by 27.5% from last year. As IoT expanded following the expansion of smartphone market, the monthly average Internet data traffic volume in 2017 is forecast to be 120.6EB.
As part of this effort, Samsung Electronics is further accelerating entry into communications equipments market. As an example, it has promoted V.P Kim Yeong-gi to president at the recent executive personnel appointment, and strengthened his role. Since the establishment of Samsung Network R&D Center in Shenzhen, China earlier this year, Samsung Electronics’ overseas market entry has been more aggressive. Based on the R&D Center in Shenzhen, Samsung Electronics plans to enter the advanced markets in Europe and the U.S. by combining R&D, production and sales functions. Samsung Electronics is dispatching top-level personnel to the R&D center in order to set the wheels moving in a short period of time. From Network Business Division, excellent human resources ranked as class S for two years or more were sent to the Shenzhen R&D Center.
Samsung Electronics will also foster data center and cloud computing-related businesses to process and save the rapidly increasing data. While the focus had been placed on hardware products relating to memory semiconductors and server data centers, Samsung Electronics set up a goal to create high added values by selling the system as well. The recent appointment of President Jeon Dong-su who developed his career in Samsung Electronics’ Memory Business Division as the CEO of Samsung SDS is also analyzed as the company’s strategy to foster system and service business.
In the long-run, Samsung Group will develop high-tech materials business in an attempt to seek for synergy with Samsung Electronics. Samsung Display recently became the largest shareholder of Corning, a glass materials maker, and Cheil Industries branched off its fashion business sector and took over Germany’s Nova LED.
“We are ready to use all methods considering M&A if there are businesses that can be used as our new growth power,” said a high-ranking officer from Samsung. “We will not settle for our current achievements even if our businesses (including smartphone business) are producing satisfactory outcomes.”
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